GOVERNOR SPITZER LEADS FIRST MEETING OF
COMMISSION TO MODERNIZE REGULATION OF FINANCIAL SERVICES

Commission Discusses Regulatory Reform to Help
Maintain New Yorks Status as World Financial Capital and Ensure the Highest
Standards of Consumer Protection for New Yorkers

Governor Eliot Spitzer today hosted the first formal meeting of the
Commission to Modernize the Regulation of Financial Services, which includes heads of
major financial services organizations, consumer advocates, the business community,
legislators and regulators. The commission discussed an innovative proposal to institute
principles-guided regulation in New York along with other potential reforms.

New Yorks financial services market has been burdened by current
regulations  a litany of detailed rules that are ineffective at achieving consumer
protection. The United Kingdom and other international markets are moving to
principle-based regulation, which focuses on broad guidelines. Some companies and
consumers are concerned this may mean diminished compliance with specific rules, but the
new principles-guided approach preserves relevant rules, while asking regulators and
companies to focus on achieving desired outcomes. The result will be healthy markets and
strong consumer protection without unneeded burdens.

The financial services industry is a bedrock of New Yorks
economy. The commission will make recommendations for new laws and regulations that
promote competition and business growth, while effectively protecting consumers and honest
businesses from unfair or unethical practices. By reforming burdensome and ineffective
regulation, the commission's recommendations will help New York retain and enhance its
status as the world's financial capital.

"Modernizing regulation of financial services is first and
foremost about keeping New York the financial capital of the world, said Governor
Spitzer. The fact of the matter is that New Yorks current regulations are out
of date. We must have regulations that promote our essential goals: a healthy, creative
competitive market for financial services, access for consumers and businesses to the
services they need, and strong, effective consumer protection. Furthermore, my experience
has demonstrated to me that proper regulations will have a positive impact on the
financial market. We have brought together many of the best minds in the State to
accomplish this task.

After the meeting, Governor Spitzer was joined by Herbert M. Allison,
Chairman, President and Chief Executive Officer, TIAA-CREF, Laurence D. Fink, Chairman and
Chief Executive Officer, BlackRock, John J. Mack, Chairman and Chief Executive Officer,
Morgan Stanley and Martin J. Sullivan, President and Chief Executive Officer, AIG at a
press conference to discuss the work of the commission and how principles-guided
regulation will lead to a focus on outcomes rather than process.

The commission will consider:

Developing principles-guided regulation as a unique alternative to the
principles-based approach being instituted in the United Kingdom. The new method provides
the benefits of a principles-based approach, while preserving the positive elements of
current regulation. Under the principles-guided approach, the principles act as guidance
for interpreting existing regulations and statutes, and as key objectives for developing
any future regulation. The principles guide the regulator to focus on outcomes, rather
than the rules in and of themselves.

Having a single state regulator for all financial services. Similar products should not
be treated differently if they are sold by different types of companies.

Instituting a risk-based approach to regulation. Examinations of financial services
companies should focus on what is important and what really makes a difference.

Eliminating out-of-date rules that are unnecessarily burdensome.

Senator Hugh T. Farley, Chair of the Banking Committee said: New
York remains the center of the global financial universe. In order to maintain our
leadership, we must balance the need to encourage innovation and competition with our
responsibility to ensure safety, soundness, and consumer protections. This commission
provides the opportunity for our finest thinkers to help guide financial regulation in the
new millennium.

Senator James L. Seward, Chair of Insurance Committee said: The
financial services industry is a key component of the economy of New York State and the
nation. I believe that it is important that we continue to review ways to ensure the most
effective and efficient regulation of the financial services industry in New York State. I
am hopeful that the deliberations of the commission will help to ensure that New York
State continues to be a leader in the regulation of insurance and financial
services.

Assemblyman Joseph D. Morelle, Chair of the Insurance Committee said:
Principles-based regulatory reform will establish the foundation for a more
market-responsive and prosperous financial sector while at the same time providing the
ethical guidelines and consumer protection the public requires. Our current rules-based
approach places us at a disadvantage in terms of more progressive overseas markets. In
order to maintain New York's primacy in the financial world, a prudent change of approach
is needed now.

Assemblyman Darryl Towns, Chair of the Committee on Banks said: I
look forward to serving on the commission and working together with the financial services
community to improve the regulatory framework governing this vital industry so that New
York can retain its status as the world financial capital, and ultimately, so that we can
provide our consumers with quality, innovative financial services.

Insurance Superintendent Eric Dinallo, the Chair of the Commission to
Modernize the Regulation of Financial Services, said: The benefit of state
regulation is that states can be the laboratory for developing best practices. We want to
offer New York as a national model of how to regulate financial services.

Richard. H. Neiman, Superintendent of Banks for New York State, said:
We see this as the perfect time to reevaluate our regulatory models, to ensure they
are calibrated to respond to the emerging challenges of an increasingly global
marketplace. The Banking Department is well underway with a top-to-bottom review of the
banking law, to identify further opportunities to reform.

Commission Executive Director Scott Rothstein said: We are
proposing that the commission consider recommending a unique approach to regulation in New
York--a principles-guided regime. This is a way to focus on outcomes within the existing
regulatory framework. The principles serve to help the interpretation of rules and guide
creation of new rules. We can thus move to greater focus on outcomes, without sacrificing
certainty for the industry or consumer protection.

Martin J. Sullivan, President and CEO of American International Group,
Inc., said: We are grateful for the opportunity to participate in this important and
promising initiative. We look forward to helping ensure that the commission achieves its
goal of streamlining the regulation of New Yorks financial services sector in a way
that enhances the industrys ability to compete globally and better serve its
customers.

Herbert Allison, Chief Executive Officer of TIAA-CREF said: I
commend Governor Spitzer for creating this commission to comprehensively review New York
States approach to regulating its financial industry, and look forward to
constructive discussions among commission members in the months to come, said. If
conceived and implemented properly, steps to modernize regulations could better protect
the publics interest and enhance New Yorks position in the increasingly
competitive global market for financial services.

Hector Sants, the Chief Executive Officer of the Financial Services
Authority of the United Kingdom, spoke to the commission about how his agency, the sole
regulator for all financial services in the U.K., is transitioning from rules-based to
principles-based regulation.

Since the commission was announced, its staff has been meeting with
members one-on-one to discuss their views on the key issues. This extensive review ensured
that the first formal meeting was a more productive gathering.

The work of the commission will now be conducted through working groups
by industry: insurance, banking and securities, and by topics such as principles-guided
regulation, a single state regulator, registration and licensing, and how to manage the
difference between regulation required for transactions with individual investors as
opposed to among large institutions.

The meeting was held at New York Universitys Helen and Martin
Kimmel Center for University Life in the Rosenthal Pavilion.